This Is What It Really Costs to Get Sick

It's very difficult for many of us to think about the possibility of getting sick. When you're healthy, it doesn't seem like you'll ever have to worry about illness. And after all, isn't that what health insurance is for?

But falling ill is not just costly to your insurer. Your poor health can not only affect your finances, but also those of the medical industry, your employer, and the economy as a whole. Here's what you need to know about how costly it is to be sick.

Personal Costs

Your personal costs due to poor health are fairly obvious — the amount you spend on co-pays, pharmaceuticals, outpatient care, and the like. If you are underinsured or uninsured, you may have to pay these costs entirely out of pocket.

Some insurance policies may recommend a hospital, but not all the doctors in that hospital may participate in the insurance network. So you can get in the weird situation where you go to an in-network hospital for a complex medical problem, but the specialists (like pathologists) who treat you but don't participate in the network. Bam! — You're stuck with their huge bills with no help from your insurer since the doctors are 'out of network.' (This is the case for many current insurance policies as well and is not a direct consequence of Obamacare.) Worst of all, Obamacare imposes no limit on charges from out-of-network doctors, so you could still lose your house.

That's why it may seem safer to just not get sick and not go to the doctor. But of course, that won't solve anything — and avoiding the doctor can make things worse. According to the National Coalition on Healthcare:

The United States spends almost $100 billion per year to provide health services to people who are uninsured. Much of that money is spent because uninsured patients wait until the 11th hour to seek care, when they could have been treated much more effectively and for less cost at an earlier stage of their medical problem.

Even if you do have health insurance, you may avoid the doctor because you cannot afford the copay. But skipping doctors' visits is simply kicking the problem down the road, and it ends up costing more people than just the individual who can't afford care.

The thinking behind EMTALA is certainly noble. It requires that hospitals provide emergency care to anyone who needs it, no matter their citizenship, legal status, or ability to pay. And we would all hate to live in a society that would allow someone to die simply because they have no ID or insurance card on them.

The problem with this policy is that Congress did not specify where the compensation for the care would come from. Hospitals have no choice but to go after the uninsured (and underinsured) patients — which means that hospitals lose about $34 billion per year in unpaid bills.

And of course, anyone who has been to an emergency room in the last few years has seen the other problem that occurs when emergency care is the only place the uninsured know they will see a doctor: Many people are coming to the ER for non-emergencies. This crowds emergency rooms, making it that much harder to diagnose and treat each patient. In addition, ER care for non-emergency issues adds to the costs of medical care.

Productivity Costs

It's likely that you receive your health insurance through your employer. For that reason, your employer has a stake in keeping you healthy. After all, it costs the company money when you get sick — whether you're simply taking a day or two off work to recover from that stomach bug, or you need several weeks off to recover from a major illness.

But there's more to the cost of your poor health than just medical costs. Your lost productivity costs your employer big time: Poor health costs U.S. employers $576 billion annually. Those costs include wage replacement, including sick pay, workers' comp, and short- and long-term disability; medical and pharmaceutical costs; and lost productivity.

Loss of productivity is maddeningly difficult for employers to define, which means that they will often only count medical and pharmaceutical costs when determining how much they spend on poor health. However, according to a study published in the Journal of Occupational and Environmental Medicine, for every $1 that an employer spends on medical and pharmaceutical costs for an employee, there is an additional $2.30 of health-related productivity costs on average. (For some conditions, the additional productivity cost is much greater.)

This is one of the reasons why it can be so difficult for employers — who are the largest group of health insurance providers in America — to determine the best way to improve the health of their employees. If employers are focused on the health conditions that cost the most in terms of medical and drug costs (e.g. cancer, heart disease, and high cholesterol), they miss out on the conditions that are truly driving their company's health costs — conditions like depression, obesity, arthritis, back/neck pain, and anxiety.

Keeping Yourself and Your Finances Healthy

While it is clear that the health care system as a whole needs some major changes, the good news is that individuals can work to improve the cost of health care for themselves. Whether you have decent insurance coverage or not, you can invest in your own physical health by exercising, quitting unhealthy habits, getting regular checkups, and eating well. Not only will you see the benefits of improved health, but so will your community, your employer, and potentially American economy.

Have you suffered extra costs do to illness? How did you manage your budget? Please share your experience in comments!